Mary Harney (Dublin Mid West, Progressive Democrats)

For the first time, I have secured a Government decision to put VHI on a commercial footing. The tragedy is that it was not done in 1996, when we legislated for risk equalisation, since it is among the reasons that we do not have a level playing field. VHI does not have to meet its competitors' solvency requirements, a major issue for the latter. The Deputy knows that it is being pursued by the European Union. The regulatory body requires 40% of premium income to be put aside as a reserve, while in the EU generally the figure is 23% or 25%. Our requirements are far too severe and very conservative.

The group that I recently established, led by Mr. Colm Barrington, is specifically tasked with taking on board what BUPA and Vivas have said, namely, that one cannot make a fair return on capital in the Irish market. Its members have enormous experience of insurance and investment and will report by the end of March.

In the meantime, there are real issues to address. We have an exemption under Irish law whereby one can enter the market and provide health insurance for three years without making any risk equalisation payments. That issue must be addressed, and I intend doing so, but there are also other questions. For example, many people do not yet realise that one can switch from one insurance company to another without any penalty. I still find that there is great ignorance among consumers in that regard.

Among the suggestions in the two reports that I have mentioned is that renewal notices be issued up to a month in advance. I believe that the period for car insurance is 15 days and that has had a major impact. At least people then have a chance to shop around. The HIA has recommended that up to a month's notice be given and renewal notices should probably include reference to the fact that one can switch insurers without any penalty.

On the future of VHI, the Government has decided to commercialise the organisation and it is important that this is done as quickly as possible. The Deputy acknowledged on a previous occasion that it could not happen overnight because of the solvency issues. I have not spoken to VHI about price increases, nor would I interfere with its board or executives. I therefore resent very much any suggestion that, because there is an upcoming election, the VHI has been asked to act inappropriately. I would not stand over any Minister being involved in practices of this kind. It would be totally dishonest and the board of the VHI would be reckless if it were to agree to such a request, if put to it.

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